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Old guard
You will know already, I am sure, that the good old days when men retired at 65 and women retired at 60 are long gone. The state pension age for women is already set to rise to 65 so that both men and women will retire at the same age in future. The common state pension age of 65 is then set to increase to 68 for everybody by 2046.
According to recent reports, raising the state pension age still further to 70 could produce savings to the Exchequer of £9bn a year in today’s money, which is equivalent to a 2p rise in income tax, not an amount to be sniffed at. Indeed, it could be politically easier to raise the retirement age than raise taxes, as far fewer voters would be affected.
If the state pension age went up to 70 from 2046, it would only affect people born after 1978, most of whom are still below voting age and many who are not even on the planet at the moment as they have not been born yet.
Raising the state pension age gives double bubble to the Government in ways that may not be immediately obvious. First, of course, money is saved because people will have fewer years in receipt of the state pension. But the state pension age is also the age at which we stop paying National Insurance contributions, so raising the pension age by two years would not only save two years worth of pension payments but would also rake in another two years of National Insurance contributions.
Some young women these days have already seen their state pension age go up from 60 to 68. This means they will pay for their pension through National Insurance contributions for an extra eight years and receive their state pension for eight fewer years.
The big question, I suppose, is how would that particular group feel about paying for an extra 10 years for 10 fewer years of pension payments?
More importantly, this issue raises the bigger question of just what the old age pension (I use the traditional term deliberately) is for. It is possible, for instance, that what we have come to think of in the last half century of what a state pension is all about may be wrong. The idea that healthy and wealthy people can stop working and just sit back in the prime of their lives and live a life of luxury is compelling. It is possible to achieve that, of course, if you are lucky enough to have a great deal of money but not everybody can do that. Indeed, by definition, not everybody can ever do that.
The basic state pension, the old age pension, is just that - it is an income to support us in our old age. If we are lucky enough to be part of a shift in human history that will enable unprecedented numbers of us, as we live in our unprecedented numbers, to live ever more to the optimum age possible, then we will need to rethink just what an old age pension means.
Steve Bee is managing pensions partner at Paradigm
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